A New Interpretation and Derivation of the Gini Coefficient

Kwang Soo Cheong

Assistant Professor, Department of Economics, University of Hawaii at Manoa, 2424 Maile Way, Social Sciences Building 528, Honolulu, HI 96822, Tel: +1-808-956-7653, Fax: +1-808-956-4347 kscheong@hawaii.edu

JEL Classification: D31, D63

Abstract

We show that the Gini coefficient is a simple linear transformation of the center of gravity of income distribution. The new derivation and inequality decomposition methods are applied to income data for Korea in order to analyze the distributional impact of the recent economic crisis. We also discuss the potential benefits of using additional higher moments of the relative income rankings.

Keywords:

Income inequality, Gini coefficient, Lorenz curve

Acknowledgments

I am grateful to Hyungpyo Moon of the Korea Development Institute for providing income data used in this study. I also gratefully acknowledge the insightful comments from three referees of the journal. It is a matter of course that all errors are mine.

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